Quarterly Journal of Austrian Economics

The Failure of OCA Analysis

Volume 7, No. 2 (Summer 2004)

In this paper the theory of optimum currency areas (OCA) is presented, and then I will attempt to prove:

1. The OCA theory is nonoperational and irrelevant in dealing with the present international monetary situation.2. The basic postulates of OCA theory are internally inconsistent and incompatible with economic theory.